COMPENSATION & BENEFITS: Southeast Asia was not immune from the economic downturn and inevitable lay-offs caused by the global pandemic.
Indeed, 2020 was a year to forget for most of the region’s sectors, with tourism, manufacturing and financial services all suffering massive downswings, and 2021 was not yet significantly better.
Singapore and Malaysia both experienced the worst economic recessions in their histories and Thailand is still feeling the effects of a brutal year-and-a-half on the economy.
The result for the private sector was a vast reduction in overall compensation and benefit packages, as well as pay freeze strategies alongside significant reductions in the size of the workforce. According to consultancy firm Willis Towers Watson, about 30% of businesses in Southeast Asia froze salaries at some point during the past two years. Peter Bithos, CEO of employment marketplace Seek Asia, has advised that many sectors have had to adjust compensation and benefits because of the pandemic.
“In Singapore, for example, there are several sectors that have been impacted by Covid-19, such as traditional manufacturing and administration jobs. Singapore has lost somewhere in the neighbourhood of up to 200,000 jobs in declining industries,” he told the media last year..
According to a recent policy brief from the International Labour Organisation, 2020 saw approximately 11 million (or 3.2%) fewer workers in steady employment in Southeast Asian markets than what would have been expected had the pandemic not occurred. In addition, the region recorded working-hour losses of 8.4%, relative to the same period in the fourth quarter of 2019.
This upheaval created unprecedented uncertainty across many sectors, with no surety that 2021 would improve. However, last year did bring some muted confidence back, and competition for the best talent is now expected to start heating up in 2022.
Head of Talent and Rewards at Willis Towers Watson, Vidisha Mehta (pictured, right), says compensation and benefits to employees will likely reflect the demand of certain sectors and how each was impacted by the pandemic. “High tech as an industry is continuing to do well,” she says. “We're also seeing pharmaceuticals and healthcare do well and project higher (salary) increases relatively.
“There are, of course, industries that have been adversely affected by the pandemic such as the travel industry, physical retail, and (each of) their corresponding sub-sectors. So, there might be a little bit of conservatism in those industries.”
Taking a look at the Hays Salary Guide shows us that 55% of recruiters across Southeast Asia claimed there had been no hiring freezes in 2021, with the use of temporary, consultancy and contract staff increasing by 20% on the 2020 base. The guide claimed that the technology, administrative and project management sectors would prove to be particularly in-demand in the year ahead.
Meanwhile, the Robert Walters Salary Guide for 2022 confirmed these findings, including the
reduction in impact on the hiring market of 2021. Robert Walters' Thailand Country Manager, Punyanuch Sirisawadwattana (pictured, right), says those companies surveyed had seen an uptick in hiring senior roles with much higher demand in the technology sector, the most glaring statistic - particularly in digital and e-commerce sub-sectors. Fast-moving consumer goods, manufacturing, engineering and healthcare also forecast to increase hiring.
"There is a concern in Thailand and other ASEAN countries that the availability of local talent may limit the demand for these roles. Therefore, headhunting will be more common. Another outcome will most likely be that salaries will rise by anywhere from 10% to 30% for the most critical roles," Sirisawadwattana said.
Retaining and ensuring employees' effectiveness can be as distressing and challenging as attracting quality staff. The Hays 2022 Salary Guide, for example, showed that five in 10 employees surveyed in Malaysia were dissatisfied with their current compensation and benefits package. Thus, it is noticeable that employers are expected to provide desirable and appealing benefits packages to retain top talents in their organisations. A good set of employee benefits packages enables organisations to support further employees' ability to grow and engage in companies' core values.
Although 2020 and the early stages of 2021 saw a wave of headcount reductions, salary freezes and deferments, pay-for-performance — a tried and tested method for keeping employees adequately remunerated — has remained encouragingly consistent. Lee Voon Keong, Associate Partner at Human Capital Solutions, Aon - Southeast Asia, is insistent in advocating for pay-for-performance, especially while Covid-19 is forcing organisations to think about how they can become increasingly agile.
“It will bode well for forward-thinking organisations to strategise towards long-term drivers of pay and performance and make changes in a phased manner to optimise pay effectiveness,” he explained to Chief of Staff Asia.. “This will help them to address their priorities and align to the outlook of their respective industries.”
Pay-for-performance will be a vital tool in maximising the output of employees by providing them with the incentive to achieve their respective companies’ goals as the region claws its way out of the pre-2021 pandemic doldrums.
This feature was extracted from Chief of Staff Asia's report on Compensation, Benefits, and Employee Health. For further coverage, and access to the full report, please see any of the below links:
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